DSG International, the pan-European electrical goods retailer which owns Currys and PC World, issued a surprise profits warning on the back of dire Christmas sales, sending its shares down more than 22 per cent and putting pressure on other British retailers.

Shares of DSG tumbled 22.3 per cent, or 24.25 to 83p in early trading after Europe's largest electricals retailer said it expected full year profits before tax to be about £40 million to £50 million lower than current analyst expectations.

Analysts had been expecting DSG to post a pre-tax profit of between £300million and £320 million in the year to end-April.

In the year to April 2007, the group made £300 million, but at the half way stage in October, it reported a 25.4 per cent slump in underlying pre-tax profits to £52.4 million.

DSG said that like-for-like sales in the 11 weeks to December 29 were down 1 per cent, as sales of computer goods tumbled 11 per cent, particularly in the UK and consumer demand for electrical goods, mostly in Italy and Spain, dried up.

The news sent shares of other British retailers lower. Home improvements group Kingfisher was down 3 percent, Kesa Electricals fell over 3 percent and general stores group Home Retail was down 6 percent.

Britain’s retailers are struggling as cash-strapped consumers reduce their spending following a series of interest rate rises and amid rising fuel costs, a slowing housing market and the pressures of the global credit crunch.

The news came as Next, the high street retailer, gave a gloomy forecast for 2008 as it reported flat sales for the six months to December 24.

DSG Finance Director Kevin O’Byrne said: "Overall trading has clearly been very disappointing and reflects a slowdown in consumer expenditure."

He told reporters on a conference call that a reduction in UK interest rates would help and send the right message to consumers.

He said: "I think that’s what a lot of people are expecting.”

The weak performance will put pressure on John Browett, DSG's new chief executive who joined the group from Tesco.com just three weeks before Christmas.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats